What Might Have Been: Sears Misses out on Millions in TCPA Settlement Funds For Cruise Line Robocalls Due to Untimely Subpoena

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Along with many other retailers, Sears Holding Corporation (“Sears”) has fallen on some hard times recently.  In an apparent effort to boost its bottom line, Sears recently submitted a revised claim in an effort to collect up to $6.2MM of the settlement fund in the big Birchmeier v. Caribbean Cruise Line, Inc., Case No. 12-CV-4069 TCPA class action settlement. Although Sears contends that it received over 12,000 calls qualifying for recovery against the settlement fund, in a ruling last week the district court upheld a special master’s determination that Sears had submitted its claims untimely and, on that basis, denied the claims.

Here’s the background: Birchmeier v. Caribbean Cruise Line, Inc., Case No. 12-CV-4069–brought to us by Jay Edelson’s firm— is potentially the largest TCPA settlement in history with a cap at $76MM in funds available to pay settlement costs, fees, and class member claims. The Seventh Circuit has already upheld the fee component of the settlement and overruled objections. So now its just a matter of assessing the validity of claims and writing checks.

Under the terms of the settlement, class members submitting claims can recover up to $500.00 per call. Since the settlement pays on a per call basis, however, class members are put to proof of identifying their qualifying calls. Recognizing that this might mean the need to subpoena phone carrier records, the court extended the initial claim deadline from February 1, 2017 to February 22, 2017 for any claimant that had issued a subpoena to the carriers by the initial deadline. It also allowed those class members that had issued subpoenas by February 1, 2017 to supplement their claim forms by March 20, 2018.

Sears properly submitted its initial claim ahead of the February 1, 2018 deadline for a whopping 18 calls, but came late to the party with its subpoena–which it issued on February 9, 2018. (Sears claims the delay was through no fault of its own because “Sears did not receive notice of the Caribbean Cruise matter under the class notice plan… it received notice of the matter by word-of-mouth a few days before the claims deadline and just in time to retain counsel.”)  When the records rolled in it amended its claim on March 20th, April 24th, and ultimately on April 26th to include the allegedly 12,424 qualifying phone call records identified from the subpoenaed records.

Sears’ amended claim was rejected by the special master overseeing the administration process, however, as untimely. The special master determined that the subpoena to the carrier had not been issued in accordance with the time frames set in the district court’s ruling extending the claim deadline. So the amendment could not be accepted. So Sears was stuck with a maximum recovery of $9,000 for the 18 calls it initially sought recovery on, rather than the (up to) $6.2MM it would have recovered if the amendment was permitted. Eesh.

Sears sought review by the district court of the special magistrate’s denial but, in an order issued last week, the district court sided with Defendant and held that the claims would be disallowed because the special master did not abuse his discretion in denying the claims as untimely:

“[T]he question is whether the special master abused his discretion in disallowing the late claims (defendants so argue in opposing Sears’s request, and Sears does not dispute this in its reply). See Fed. R. Civ. P. 53(f)(5). The Court concludes that the special master did not abuse his discretion. He considered the appropriate factors and weighed the equities, and although others might weigh them differently, there was no abuse of discretion. The Court therefore overrules Sears’s request for review.”

That’s pretty tough but adding insult to injury the court suggested that matters might have been different if only Sears had asked for a further extension of its deadline to submit a claim in the first place:

“The Court extended the claim deadline previously, for any claimant who had subpoenaed a telephone provider for records before February 1, 2017. But Sears did not do that, nor did it come to the Court at that time (even though it knew it was a class member) to seek a further extension based on any claimed inability to ascertain the relevant number of inappropriate calls in timely fashion. If this matter were being presented to the Court in the first instance, it conceivably might have provided some relief to Sears. But at this point, that is not the issue.”


So while the TCPAland rich keep getting richer, it seems that the poor are getting poorer as well. In Sears’ case that means it will have to settle for $9k rather than the $6.2MM it probably qualified for under the settlement. Another day, another interesting tale to tell.


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